How to Start a Busıness
How to Start a Busıness
Do you have an idea for a business? Learn how to start a business the right way with this 5-step guide. It will help you look at information that may impact the future success of your new business.
Do you want to start a business? Perhaps you see owning a business as a way to provide a needed solution to a common problem. Or, maybe you think starting your own business will allow you to earn more money, and control your own destiny. Or, maybe you want to create your own work because you’ve been laid off and can’t find a good job. Whether you are thinking about being self-employed, opening a small local business with a few employees, or launching a business that will grow into a much bigger company, the one thing you know is that you want to be your own boss.
The one thing you are less sure about is how to get a business up and running.
There are a myriad of resources out there that provide tips, do’s and don’ts, checklists and success stories. But trying to find and process all of that is time consuming. That’s why we created this step-by-step guide.
Busıness Startup Guıde
Starting a business isn’t easy, but like any other project, the secret to success is to break the project down into small steps and complete those steps one by one.
1. Do an honest self-assessment
Before you attempt to go into business for yourself, you need to make sure you’re cut out to run your own business. Questions you need to ask yourself (and answer honestly) include:
- What skills, interests, experience and industry knowledge do I have?
- Am I a self-starter or do need to have other people tell me what to do?
- Am I good at planning, making decisions and carrying them out?
- Am I open to suggestions, criticism and change?
- Am I able to set goals and deadlines and meet the deadlines?
- Will I be able to stay focused even when things are difficult?
- Am I both optimistic and realistic?
- Am I honest in all my dealings with other people?
- Do I learn from my mistakes and make changes based on what I’ve learned?
- Am I self-confident?
- How much time will I be able to devote to starting and running the business?
- How much money can I afford to put into starting a business?
- How soon do I need it to make money from the business?
- How supportive will my family members be?
- How much money will I need to get out of the business to keep a roof over my head and food on the table?
- What kind of business would best match my interests and skills?
If you aren’t sure what kind of business you want to start, think about your interests and skills, and the types of businesses that may be related to those skills. Use our business ideas section and our list of 300+ businesses to start to help you generate your own ideas.
2. Research the business idea
Once you have a business idea in mind, you need to research the market (ie, who will buy what you want to sell) and how to actually operate the business.
Market research will give you insights into who your customers will be and how you’ll need to reach them and sell to them.
A few of the market research details you should investigate include:
- How many people or businesses need the product or service you have in mind?
- Who are those people (identify your target market — what characters they share such as age, location, gender, etc.)?
- How do those people learn about this kind of product or service now?
- How will you reach those people to promote your business?
- Who will your competitors be and how many are in your selling area?
- What will you have to do to convince customers to buy from you instead of a competitor? (Tip: Undercutting the competitor’s pricing might not leave you enough profit to survive or grow.)
Busıness operatıonal and ındustry ınformation you should research ıncludes:
- What are the average annual sales for this type of business in your part of the country?
- How much profit do they make?
- Is the need for this product or service growing or declining?
- How many businesses offer similar products in the area I want to serve?
- Are people buying this product or service online instead of shopping locally?
- What are all the income streams for the business, and which is most profitable. (For example, will foot traffic provide enough income for that bakery you want to open in town, or will you need to sell to local diners, coffee shops and hotels? If so, where are those places getting their cakes and muffins now? )
- Do you need any special licenses or permits to operate the business?
- How much knowledge do you have about the operational details of a business you are considering? For instance, if you want to open a boutique, do you know where to find products to sell, how to figure up your markup, what your inventory turnover rate should be (ie, how fast will it sell out)?
- Where will you get your inventory and how much inventory will you need to stock?
- What other suppliers will you need to deal with?
- How many employees will you need?
- What local laws will you need to comply with?
Industry publications and local resources such as a local office of the Small Business Development Corporation (SBDC) or SCORE can often help you locate much of the research information you need. If you need more specific data than you can find for free, or if you don’t have a lot of time to spend hunting down sources of information, you can purchase a variety of research reports from Bizminer. The company is an excellent source for industry and location-specific financial analysis and market research data, as well as other data helpful for writing business plans. (Note: BusinessKnowHow is an affiliate for Bizminer and will make a small commission if you buy through our links.)
Buying an existing business or a franchise:
- If you’re buying an existing business, why is the owner selling it?
- What are their annual sales?
- What is their profit?
- What is the owner’s salary?
- Have you worked with an accountant to learn what due diligence you should complete before buying the business?
- Are there any changes in the works (new shopping malls, big box stores, highway or other construction for instance), that could have an adverse impact on the business you’re thinking about buying?
- If you’re thinking about buying a franchise, how much training and operational guidance will the franchise you have in mind provide? How successful are they and their franchisees? FranchiseGrade.com is a site that rates many franchises.
- How successful are other franchisees of this brand?
If you are thinking about buying a franchise, we suggest purchasing The Franchise Buyer’s Manual. The book is written by industry expert Ed Teixeira, and is sold by BusinessKnowHow in the Business Know-How store.
3. Wrıte a busıness plan
To be honest, a lot of one-person startups skip this step or gloss over it. But that’s not a good idea. A business plan forces you to look at all the marketing, operational and financial information you’ve collected, and to lay out specific plans, goals and timetables. Once it’s written, it will serve as a roadmap to keep you on track and help you reach your business goals. That’s why it’s important whether you’re planning a business that will require a lot of money to start, or just want to be a one-person business.
Your business plan for your startup should cover:
- Executive summary
- Business description
- Products and services you sell
- Sales and marketing information and goals (how big is the market you can reach, why will they buy from you, how will you reach them, what competition you’ll face)
- Operational information (location, equipment, employees, management, production, distribution, form of business and other operational details)
- Financial details (projected startup costs, financing, projected monthly expenses and profits and break even point)
No matter how big or small a business you’re planning to start, be sure that all of the information and projections are based on facts you’ve researched. If you won’t be seeking investors and won’t be spending a lot of money to start your business, your initial business plan can be fairly short and simple.
If you will be investing a lot of money into your startup or seeking investors, you’ll need to include enough details to support your assumptions and show how the investment will pay off. In either case, business plan software such as LivePlan can make the process of writing your business plan easier.
4. Get your startup ready for busıness
Now you’re ready to deal with the nuts and bolts of setting up your new business. The specific tasks you’ll need to complete will depend on the nature of your business. Among them will be naming the business and making sure you have the right to use the name, registering the business with appropriate authorities, choosing a form of business, getting business licenses and certificates, getting a tax ID if you will have to collect sales tax, renting space (if necessary) and getting an accounting system set up. You’ll also want to get a website and social media accounts set up for the business.
The easiest way to keep track of all of these startup tasks is to create a checklist. This startup checklist will help you decide what should be on your own list.
5. Open your doors for busıness
Now it’s time to let the world know you’re in business. Even if you are opening a shop in a busy downtown area, you can’t expect customers to miraculously show up on your doorstep. You have to start marketing and selling. Get out your publicity. Create fliers and brochures. Get to network meetings. Tell all your friends. Ask for referrals. Get on social media. Place ads you want to place. If you need more suggestions for finding customers read these articles:
Most businesses don’t become successful overnight. So don’t be discouraged if it takes time to get a steady stream of customers. Keep marketing and talking to potential customers. Ask customers and prospects for feedback (and referrals!) and make adjustment to your business plan if necessary.